DRAM Chip Inventories Fall, Spot Price Rebound Seen: Merrill Analyst
March 21, 2001 (TAIPEI) -- A Merrill Lynch analyst has predicted that the prices of DRAM microchips are approaching a low level.
Joseph Osha, a Merrill Lynch analyst, said that DRAM prices are set to bottom out, as there is no room for a further downward movement. Osha gave an unchanged investment rating of "medium-term buy" to chip-making giant Micron Technology Inc.
Also, the investment company's prediction was bolstered by the news that several leading Taiwanese chipmakers, including Winbond Electronics Corp., Nanya Technology Corp. and Powerchip Semiconductor Corp., have confirmed that their inventories have been falling since March. They see a rebound of DRAM spot prices ahead, as their inventories can only meet the market's demand for three weeks.
The 64Mb DRAM and 128Mb DRAM prices are said to have climbed to US$2.1 and US$4.1, respectively, equivalent to the chip-making costs of Taiwanese companies, as Hyundai Electronics Industries Co., Ltd., a Korean chipmaker, decided to slash production at its fifth and sixth plants, probably by around 10 percent. As shipments of motherboards and PCs begin to rise, investors have increased their purchases of DRAM shares, expecting profits from a rebound.
Osha said he sees the light at the end of the tunnel, and believes that a rebound in DRAM prices would follow, in view of the narrow prospects of further falls.
In fact, several motherboard powerhouses, such as Asustek Computer Inc., Gigabyte Technology Co., Ltd. and Micro-Star International Co., reported that their sales for January and February rose by more than 60 percent. The increasing sales have speeded up the consumption of chip inventories, which have fallen to their normal level of one week's supply. A recovery in the chip market may occur in April.
Osha will travel to Taiwan for an investment presentation in late March. His forecast for the DRAM industry is expected to be the main subject of the presentation.
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